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Covid-19 also has led to increased component costs, the need for electronics companies to rework their products, and the inability to fill customer orders. That is especially problematic in a challenging economy that exacerbates the need for new business revenue and protected margins.
Sourcing components has become a problem across the globe as factories shut down or re-open at a staggered pace. The vast majority (91 percent) of electronics companies surveyed said sourcing issues are the cause of product launch delays.
In its recent semiannual forecast, the Institute for Supply Management found supply chains are out of alignment for many global manufacturers. Mexico recently began ramping up auto manufacturing; scaled back; and then started re-opening again. Mexico relies on the U.S. for many of its auto subassemblies, explained Tim Fiore, chair of the ISM’s manufacturing committee. U.S. factories are re-opening at a different pace. “If the U.S. and Mexico supply chains aren’t aligned, it doesn’t matter when Mexico re-opens,” Fiore said.
Ninety-five percent of the Dimensional survey group agreed that the path to solving component sourcing issues requires integration of engineering, sourcing and partners. Planning for supply disruption is best done at the beginning of the design cycle but is typically discovered in manufacturing.
“New product introduction (NPI) is never easy, but the shortages experienced during the coronavirus pandemic have created a new set of challenges for manufacturers across the globe,” said Steve Flagg, CEO and founder of Supplyframe, in a release. “This experience puts greater emphasis on the importance of building resilient supply chains. That starts in the product design phase with a connected NPI process – enabling effective collaboration across sourcing, engineering and manufacturing and injecting prescriptive intelligence into the process at every decision point.”

Source: Dimensional Research, Supplyframe
The coronavirus impacts the electronics industry
The study highlights the broad effects of the Covid-19 pandemic. In addition to the product launch impacts, 37 percent of electronics companies surveyed said their overall component costs have increased. The same share said they are unable to fill customer orders. Nearly as many (35 percent) said they need to rework products to replace components that are no longer available.
Slightly less than a third (31 percent) said they are now onboarding new suppliers without going through approved vendor processes – increasing their risk. A fifth (20 percent) said they have an unusually high number of mistakes due to team members’ stress and distraction. Nearly as many (17 percent) said they have been forced to select lower-quality component options.
Lack of collaboration adds to the pain
Covid-19 is just one contributing factor to these challenges. Other prevalent factors include the long-standing global supply chain complexity, inadequate enterprise systems, and the lack of collaboration between internal engineering and sourcing teams during new product design.
The lack of collaboration between engineering and sourcing during the NPI process can add to electronics companies’ costs, lead to delays, and set up electronics companies for greater risks. It can also put the jobs and reputations of engineering and sourcing professionals in jeopardy.
Seventy-nine percent of the survey group said that collaboration issues have caused product introduction delays, which slows time to revenue. Sixty-two percent of this group said this happens occasionally, and close to a fifth (17 percent) of them said it occurs frequently. Meanwhile, 85 percent of the total survey group said engineers select components that can’t be effectively sourced, which could be a symptom of the lack of collaboration. That often leads to greater costs for electronics companies – a whopping 81 percent of the survey group said they have been forced to make expensive spot buys because of component availability issues.
Sourcing compliant components is another industry pain point, as 93 percent of the survey group said that compliance negatively impacts sourcing processes. Sixty-two percent said selection of non-compliant parts requires rework. The research indicates that compliance concerns often slow component selection (61 percent) and negatively impact component availability (34 percent).
Existing systems are insufficient
While many businesses have enterprise systems in place, more than three-fourths (77 percent) of them said their enterprise resource planning (ERP) and product lifecycle management (PLM) systems are not fit for the needs of electronic component sourcing.
And 89 percent said they have challenges with existing applications used for sourcing electronics components. Of this group:
- 39 percent said new product component selection frequently requires bill of material (BOM) cleaning and revisions
- 36 percent said workflows bring sourcing teams in too late to effectively influence design decisions
- 35 percent said existing sourcing technologies are inflexible and unable to respond to unplanned events like hurricanes and pandemics

Source: Dimensional Research, Supplyframe
These archaic solutions also lack cost optimization capabilities from which electronics companies could benefit. Indeed, 81 percent of those surveyed said their sourcing applications prevent them selecting optimal cost options – with more than half (54 percent) running into this problem occasionally and nearly a third (28 percent) dealing with this challenge on a frequent basis.
“Uncertainty and complexity are constants in business today. But electronics companies have more control of managing their risk than they may realize,” said Flagg. “Risk does not exist solely in post-product release endeavors. Eighty percent of the lifetime risk and cost of a typical hardware product is decided during that product’s design process. Companies need to examine what’s happening in the design phase because that’s where the disconnect often exists.”
When engineering teams design products without input from procurement and sourcing teams, they may overlook better component options, potential cost savings, and other factors that could lead to improved business outcomes. But when engineering, procurement and sourcing teams collaborate – and have access to market intelligence about real-time inventory availability, cost and changes – they can de-risk as they design. Indeed, 99 percent of the survey group reported direct benefits from early collaboration between engineering and sourcing teams.
The “2020 Trends in Electronics Sourcing” study created by Dimensional Research and commissioned by Supplyframe is based on an online survey of 217 decision-makers responsible for sourcing electronic components at OEM companies with 500 or more employees.